The stock market has been affected for two reasons. First, some stock prices have been buoyed up by the prospect of private-equity led takeovers. With debt markets essentially closed those leveraged deals are much less likely. Some announced deals will almost certainly not come to fruition. And, secondly, because stock markets can be a leading indicator of trouble ahead in the real economy. There is clearly a risk that financial market turmoil will have an effect on the real economy in due course. But the fact that equity prices fall does not create any justification for intervention by the authorities.
The debt markets are the ones to watch in the next few days, not the Dow or the Footsie.